The Disadvantage of Using an Interest Only Line of Credit

question 74

True/False

The disadvantage of using an interest only line of credit is the considerably longer time it takes to repay the loan in comparison to a traditional consumer installment loan.

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Definitions:

Recognition Criteria

The standards or requirements that must be met for a particular item to be reported or included on a company's financial statements, ensuring the item's relevance and reliability.

Faithful Representation

When an economic phenomenon is depicted completely, neutrally, and free from material error.

Economic Benefits

are the advantages or gains that entities expect to receive as a result of certain actions or investments, often measured in terms of cash flows or cost savings.

Qualitative Characteristics

Attributes that make the information provided in financial statements useful to users, such as relevance and faithfulness.